Is their a justification for small countries having national carriers at such huge fiscal costs (4.5 percent of GDP)? Please advice.
Although the public debt-to-GDP ratio rose, debt service obligations remained manageable. Public debt doubled to over 80 percent of GDP at end-2005/06 from mid-2000. The bulk of the increase was rupee borrowings from India for Tala. Domestic financing of budget deficits—in particular, purchase of an aircraft at a cost of about US$39 million (4½ percent of GDP) for state-owned Druk Air—also contributed to the increase in the public debt ratio. However, with debt service payments on Tala scheduled to begin only in 2007/08, the debt service ratio remained around 6(10) percent of exports (revenue) during the past five years....
Bhutan's economic prospects are bright. Construction of two hydropower projects will help sustain real GDP growth over the medium term. With the exchange rate peg to the Indian rupee, inflation is expected to be in line with price developments in India. The overall balance of payments is projected to be in surplus and would help maintain adequate international reserves.
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